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2013 (5) TMI 546 - AT - Central ExciseCenvat Credit denied - galvanization does not amount to the manufacture - Held that - Taking note that under Cenvat Credit Rules, the inputs can be cleared as such or after being partially processed on reversal of amount equivalent to credit availed on such inputs. That means if credit has been taken by the appellants on the inputs i.e. C.R. Coils then the Coil can be cleared as such or after some processing after reversal of the Cenvat Credit availed on the C.R. Coils. In the present case appellants have taken the Cenvat Credit and cleared the finished goods after paying duty through the Cenvat account entries and payment of duty may be more than the credit attributable to such inputs. As decided in Commissioner of Central Excise Vs. Delta Corporation as reported 2013 (2013 (2) TMI 31 - GUJARAT HIGH COURT) credit could not be denied on the ground that no manufacturing activity was carried on by the assessee - in the present case the demand has been raised for disallowing the Cenvat Credit on C.R. Coils and Zinc. Demand is unsustainable as Rules allow the clearance of inputs as such or after partially proceeding on reversal of the Cenvat Credit availed on these inputs. The duty paid on the G.P. Coils etc., is more than Cenvat Credit taken and needs to be adjusted against the demand of the Cenvat Credit. Therefore the demand of Cenvat Credit is not sustainable against the appellants.
Issues:
- Denial of Cenvat Credit on C.R. Coils and Zinc used in the process of galvanization. - Demand of rebate claim and penalty imposed. - Time limitation for the demand raised. Analysis: Issue 1: Denial of Cenvat Credit on C.R. Coils and Zinc The appeal involved the denial of Cenvat Credit to M/s. Hansa Tubes (P) Ltd. for wrongly availing credit on C.R. Coils and Zinc used in the galvanization process. The Central Excise Officers contended that the conversion of C.R. Coils into G.P. Coils did not amount to manufacture under Section 2(f) of the Central Excise Act. The Department issued a Show Cause Notice disallowing the Cenvat Credit and demanding repayment along with interest and penalty. The Commissioner upheld the demand, but the Tribunal disagreed. It was noted that under the Cenvat Credit Rules, inputs could be cleared after reversal of the credit availed on them. The Tribunal cited a case where credit was allowed even when no manufacturing activity was carried out. Consequently, the demand for disallowing the Cenvat Credit on C.R. Coils and Zinc was deemed unsustainable. Issue 2: Demand of Rebate Claim and Penalty The appellants challenged the demand of rebate claim amounting to Rs. 88,71,269 under Rule 18 of the Central Excise Rules. The Ld. Advocate argued that even if the conversion process did not amount to manufacture, they were entitled to a rebate of duty paid on inputs under Rule 18. Additionally, the time limitation for the demand raised was questioned, asserting that no facts were suppressed. However, the Revenue contended that since the process did not constitute manufacture, the credit was rightly disallowed. Ultimately, the Tribunal found in favor of the appellants, emphasizing the permissibility of clearing inputs after reversal of credit availed. Issue 3: Time Limitation for Demand The appellants raised the issue of time limitation concerning the demand raised through the Show Cause Notice issued on 04.05.2005. They argued that part of the demand was time-barred as no facts were suppressed. While the Tribunal did not explicitly address the time limitation aspect in the judgment summary, it was considered during the overall analysis of the case. In conclusion, the Tribunal disposed of the appeal in favor of M/s. Hansa Tubes (P) Ltd., highlighting the permissibility of clearing inputs after reversing the credit availed and emphasizing the unsustainable nature of the demand for disallowing the Cenvat Credit. The cross objections were also disposed of, and the order was pronounced on 20.03.2013.
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